SUGAR INDUSTRY: Anger at stalled sugar package

by Patrick J. Byrne

News Weekly, February 26, 2005

When the Federal Government announced a $444 million package for the sugar industry last year prior to the federal election, it was to include two sustainability payments to "help farmers through a transition phase towards reform", a re-establishment grant to those wanting to exit the industry, and an intergenerational package to assist transfer of the farm to the next generation.

The first sustainability payment was made last year, but federal Agriculture Minister, Warren Truss, has suspended the second payment, claiming Regional Advisory Groups (RAGs) had failed to present acceptable restructuring proposals.

But the RAGs don't know what constitutes acceptable restructure plans, as the federal Agriculture Department has produced insufficient restructuring guidelines.

The RAGs are made up of farmers, millers and community representatives from across a region as well as government employees. Millers have competing interests, and therefore have in some cases presented competing plans.

The RAGs should have been made up of discrete groups, one for each mill and its cane-supply farmers, so as to avoid the competing interests of different mills in a region.

It is also being claimed that farmers have decided to stay in the industry because of a rise in the sugar price and the assistance package. Only 38 farmers and three harvesters have accessed the re-establishment/exit grant.

In reality, many farmers want to exit the industry, but the terms and the conditions of the re-establishment grant make it impossible to access. It is so restrictive that many haven't even bothered to apply.

While the government claims that the rising price of sugar is encouraging farmers to stay, the rising price is being substantially offset by the rising value of the Australian dollar against the US dollar (the currency in which sugar is traded on world markets). A rising Australian dollar means that farmers are paid less for their exports.

The biggest failure is the intergenerational farm transfer part of the package. It is almost impossible to access and so is contributing to the future loss of family-based cane farms.